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The Lessons Of The Gulf War For The Leisure Travel Sector: Is History Repeating Itself? - By PricewaterhouseCoopers UK Travel Practice leader, Malcolm Preston

Imagine the scene. - War is looming, and booking a holiday is the last thing on many consumers' minds.The leisure travel sector fears a meltdown in business, and is hoping against hope for a short, sharp conflict followed by a dramatic recovery in confidence.

Sounds familiar? - That was the situation in the winter of 1990-1991, in the wake of Iraq's invasion of Kuwait.Now, amid the latest crisis in 2003, booking figures show that consumers are reacting in an uncannily similar waysuggesting that the experience of the Gulf War may present some valuable lessons for tour operators facing a re-run.

But while hindsight may be useful, several imponderables remain.The industry cannot be sure of seeing the type of short, sharp war that enabled bookings to recover quickly in late 1991.There is still the threat of further terrorist action in popular holiday resorts.And whereas the UK economy was in recovery mode after the first Gulf War, this time it is sliding towards recession.

For leisure travel companies, the lessons of 1991 and good business sense indicate that the best approach now involves three elements.They should reduce capacity in a controlled manner, retain as much forward flexibility as possible, and avoid being panicked into the kind of wholesale discounting that would slash margins across the industry.In short, it is a time for companies to hold their nerve.

Bookings in 1990-1991 and 2002-2003: uncanny similarities - An analysis of the seasonal changes in bookings in 1990-1991 reveals some uncanny similarities with the current pattern.As Figure 1 shows, the threat of war in the winter of 1990-1991 had relatively little impact, with people who had already made bookings tending to fulfil them rather than cancel them.As a result, that season was actually above the previous year, probably thanks to the gathering economic recovery.But the downward pressure on new bookings intensified sharply once the war broke out.

The signs are that we are now following a similar path.Up to Christmas 2002, bookings for the winter 2002-2003 season were around 6% down on the (post-9/11) winter 2001-2002 season, while forward bookings for the Summer 2003 season were up about 22% on the previous year.After Christmas, as the uncertainty has intensified, the Winter 2002-2003 market has recovered slightly, but Summer 2003 bookings have slumped back again by some 20%.

This suggests a number of conclusions. One is that the threat of war does not have a significant effect on departures by people who have already booked, but that the uncertainty does severely impact new bookings. Another is that the late recovery in the current winter season suggests that many people have been taking a quick holiday in the belief they can get back before war breaks out. And thirdly, the outbreak of war itself has a dramatic effect on bookingsas shown by the downturn in the summer season 1991, when the Gulf war coincided with the booking period but had finished by the time the season itself arrived.

The booking profile: short war, sharp recovery - The booking profile for the period surrounding the first Gulf war reveals further parallels and insights.The threat of war in the period up to the end of December 1990 had a remarkably similar impact to the similar fears in early 2003 [see Figure 2], with bookings down about 20%.Then the commencement of hostilities in January 1991 saw bookings drop dramatically, with an effective decline of 60%.Given the clear similarities in the consumer reaction so far, there is every reason for thinking the same will happen if war breaks out again.

After the Gulf War was over, the leisure travel market recovered almost completely, rebounding from 55% down at the end of the war to just 4% down for 1991 as a whole.But as we have already pointed out this was following a short, relatively contained war conducted amid an economic upturn, with little prospect of war-related terrorist attacks on holiday destinations outside the combat zone.

What this suggests is that the leisure travel industry would be best served by a war that starts soon and finishes quickly.A protracted period of uncertainty is not only likely to keep bookings down until there is some kind of conclusion, but could also mean that might war break out during the summer seasonthus compounding the impact on the industry.If the uncertainty were to extend throughout the year and beyond, the outcome for leisure travel might well be nothing short of disastrous, amounting to a form of slow strangulation.

Planning for the imponderables - So the good news for the industry is that the experience of the Gulf war in 1991 does carry some useful pointers.The bad news is that the imponderablesin terms of the timing, wider impact, length and economic context of any actionare huge.

In the circumstances, the key for companies is to limit their exposure by reducing capacity to the extent they can, and by utilising their own aircraft rather than booking seats on third-party carriers. Traditionally the major leisure travel companies firm up their seating plans in January and February, so they should still have scope now to build in more flexibility.

The signs are that the industry is already moving in this direction and reducing the number of beds taken for the summer season.What the major tour operators seem to be facing up to is that the massive price-sensitivity of their marketplace means chasing market share rather than margins is a licence to lose money.Cash flow is already being impacted by the loss of deposits from the decline in new bookingsand the last thing the majors need is a discounting battle that slashes margins all round.

A further potential shift is in destinations.Around the time of the 1991 Gulf War, destinations in the 'western Mediterranean' regionsuch as Spain, the Balearics and the Canariesbenefited in terms of bookings at the expense of the Eastern Mediterranean. If war breaks out this time, the possibility of wider terrorist attacks may lead people to think more carefully about their change of destination.Florida, a destination which benefited following the first Gulf War is less likely to do so this time given the crisis of confidence in the US market following September 11 2001.

Even in good times, the leisure travel industry is a complicated business.The current stand-off makes it infinitely more so.Companies need to hope for the bestbut put themselves in position to handle the worst, should it happen.

PricewaterhouseCoopers is the world's largest professional services organisation. Drawing on the knowledge and skills of more than 125,000 people in 142 countries, we build relationships by providing services based on quality and integrity. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. Website: http://www.pwcglobal.com/

Malcolm Preston specialises in the leisure sector, with particular focus on travel agents, tour operators and hotels. He has extensive experience in audit, financial due diligence and transactional advisory work, as it relates to these sectors. He has worked with a number of major operators. One of the key drivers of PricewaterhouseCooper's leading position in providing a broad range of services to the travel industry, Malcolm has successfully completed many assignments in travel related transactions. He is also one of the firms recognised experts in providing advice to owner managed and fast growth businesses, advising a number of internet travel start-ups. In association with ABTA, Malcolm launched the Travel Agent's and Tour Operators' Benchmarking Surveys, now recognised as one of the most comprehensive surveys of the UK travel industry

Jones Lang Lasalle Hotels' 2003 Hotel Investment Strategy Annual Outlines Investment Strategies For Turbulent Times

As the world faces war and the hotel markets remain depressed, where are the opportunities for the astute investor?

"The outlook for the global hotel sector in 2003 is that flat occupancy and weak average daily rate will be the norm rather than the exception," said Arthur Adler, Managing Director and CEO-Americas of Jones Lang LaSalle Hotels. "Strong RevPAR growth will be a rarity across major markets. At the same time, investment yields for top quality unencumbered properties in the larger and more liquid markets will be under downward pressure. This creates the unusual situation of weak fundamentals and strong capital markets."

Investors have good risk-return opportunities if they stay several steps ahead of the rush to safety. Three major recommended strategies include:

· Sell properties to investors who demand the lowest-risk assets in the safest markets and are willing to pay top dollar for them.

· Buy properties one step ahead of the "core crowd" in markets that have yet to attract low risk capital, but are large enough that they soon will.

· Reposition properties in need of capital improvements and sell into the core market.

"For the strongest markets, in terms of sound fundamentals at a reasonable price, we point investors to Canada, some parts of the United States, Australia, South Korea, Singapore, Amsterdam (city centre), Barcelona, Rome, Milan and regional UK markets," said Adler.

"Canada will show more resilience to the global slowdown than the United States. It experienced less of a bubble economy and benefits from a weak currency. During 2002 Canada's hotels have experienced a lesser decline in RevPAR than their U.S. counterparts and many markets even posted a gain. In 2003 we expect to see a growth of approximately 3% in RevPAR across the major city markets, with Montreal, Toronto and Edmonton outperforming," said Adler.

"Mexico, despite being caught up in the economic woes of the United States, has made impressive improvements in the stability of the peso and the health of its banking sector," continued Adler. "It is poised to do well when the Unites States recovers and represents a logical location for well capitalized investors looking for diversification and high returns. Mexico offers high growth rates, an expanding middle class and in some cases, well established tourism infrastructure."

As well as keeping on top of the hotel market cycle, astute investors will achieve the greatest returns by overlaying this analysis with the individual hotel asset cycle, according to the Hotel Investment Strategy Annual 2003.

"Too often focus is given to macro-cycle issues, with an individual asset's life cycle given little emphasis. Investors should focus on developing a short-, mid- and long-term strategy for each asset in their portfolio, and a pre-determined exit strategy," said Melinda McKay, Senior Vice President of Jones Lang LaSalle Hotels.

"Areas for consideration include the age of the asset, product positioning (including affiliations and marketing strategies), capital expenditure - both discretionary and non-discretionary and value impact and no value impact - as well as return on investment analysis. Investors should also pay close attention to the operating strategy including branding, management, risk management and fixed costs issues (particularly insurance) to maximize value from the individual asset within the hotel market cycle," included McKay.

As world markets become inextricably linked and travelers touch more destinations, hotel investment has increasingly become a global concern. Unlike pure real estate, this has grown not only from the widening search for acceptable returns, but also from a desire to build a dominant global presence.

McKay continued, "Excluding the brand building benefits, from a pure investment perspective, the benefit of going global is primarily diversification and the opportunity to earn higher returns. Capital will tend to flow from low-yield origins to higher-yielding destinations. In the world of low inflation and single-digit returns, yield is king and the wider geographic perspective, the better the chance of finding it."

Around the world yields have undergone a roller coaster ride following the 9-11 shakeout.

"In our initial investment advice we advised that massive discounts to replacement would not be available and this has held true. Yields are unlikely to compress significantly in 2003 due to the price pressure from leveraged buyers, the risk premium that hotels must earn over interest rates is unlikely to widen further, higher yields in the secondary markets or publicly traded hotel real estate will reduce pressure on the core, direct markets and an increase in assets being offered for sale will also reduce yield pressure," concluded McKay.

About Jones Lang LaSalle Hotels:

Jones Lang LaSalle Hotels, the world's leading hotel investment services group, provides clients with value-added investment opportunities and advice. In 2001, its success story includes the sale of 7,972 hotel rooms to the value of US$1.3 billion in 39 cities and advisory expertise on 100,550 rooms to the value of US$26.3 billion across 255 cities. Jones Lang LaSalle Hotels' services include transactions, mergers and acquisitions, financial advice and capital raising, valuation and appraisal, asset management, strategic planning, operator assessment and selection and industry research. Jones Lang LaSalle [NYSE: JLL] is the world's leading real estate services and investment management firm, operating across more than 100 key markets on five continents.

e-Tid.com - PricewaterhouseCoopers now expects UK revPAR over 2003 to improve by only 1.4%, with the possibility that London could take ‘a step backwards’ over the year.
PwC's UK hospitality and leisure team partner Robert Milburn said: ‘This latest forecast points to 2003 being a stand still year for UK RevPAR. But the concern has to be that further economic slowdown, coupled with the continuing threat of war and concerns over terrorism, make it a step backwards year, particularly in London.’
The numbers make for bleak reading. The 1.4% overall lift will come from 1% rise in London and 1.8% from the provinces.

Figures for 2004 are slightly better at 5% overall (London +5.5%, Provinces +4.4%) although PwC is keen to highlight that ‘much depends on the outcome of the international political arena.

PwC research manager Liz Hall added that “the economic slowdown has already depressed corporate travel volumes but there are fears that a fall in consumer confidence could also dent leisure travel.’

Effective February 14, 2003, PATA is moving its European office from Monaco to Frankfurt, Germany. This move is precipitated by a wish to find a more central location for our European operations, in terms of proximity to PATA's key members and markets.

As a consequence of this relocation, PATA's two Monaco-based staff members, Ms. Michela Marcolina and Ms. Sonia Truchi, will be leaving PATA's employment as of February 13, 2003.

In Monaco, PATA's President and CEO, Mr. Peter de Jong, said: "Michela and Sonia were most understanding of this important but difficult strategic decision, and have been very helpful during these transition days. I am grateful for their dedication and professionalism."

PATA APPOINTS NEW MANAGING DIRECTOR FOR EUROPE

PATA is pleased to announce the appointment of Ms. Marion Buttler as PATA Managing Director-Europe, replacing Mr. Bill Hastings who left PATA on January 23, 2003.

Ms. Buttler possesses a wealth of relevant experience, having served four years as Manager Central Europe for the Australian Tourist Commission. Four years prior to that she was Qantas' Sales Manager, based in Frankfurt.

Mr. Peter de Jong said: "Marion Buttler brings the management skills, creativity and enthusiasm to this important assignment which the European region deserves and requires. Europe is highly important as it is Pacific Asia's leading long-haul market and has an extensive network of active PATA chapters." Ms. Buttler is already familiar with PATA through her previous chapter activities in Germany.

Travel industry representatives visiting ITB next month can meet her at the PATA stand in the Pacific Asia hall.

Effective February 14, Ms. Buttler can be reached at:

Tel: (49) 6101-33272
Mobile: (49) 16055-34237
Fax: (49) 6101-580181
E-mail: marion.buttler@web.de

European tourism will lose to new Asian markets, says researcher

DPA - Tourism in Europe will lose to new markets in east Asia, the Pacific and Middle East over the next two decades, Austrian tourist industry expert Egon Smeral said on Tuesday.

Despite a boost from E.U. enlargement particularly for Germany, Austria and Italy, Europe's total share of the world tourism market would decrease from nearly 60 per cent in 2000 to 46 per cent in the year 2020.

Smeral, a tourism analyst with the Austrian Economic Research Institute (WIFO), said that the tourism flows were fundamentally steered by income developments. However, tourism in developed economies tended to become more expensive, which was a dampener in that direction.

The overall growth of world tourism, in terms of arrivals, was currently 6 per cent annually, compared to an average world growth of gross domestic product of just over 3 per cent. There were presently nine to ten billion overnight stays by tourists around the world every year.

Presenting his new book, "The Future of International Tourism", Smeral said international crises generally only had short-term effects. If there were to be a war against Iraq in the near future, the decline in the number of tourists would only be temporary.

An example was the Gulf War 12 years ago when overnight stays by U.S. vacationers in Austria halved, only to return to their original level two years later. Similarly, phases of a world economic slowdown only had a brief effect.

A big boost for Austria would be the E.U. enlargement bringing 200,000 to 300,000 more tourists each year, Smeral predicted. In Austria, the present trend was away from longer holidays to shorter ones of a few days and "higher quality". There had also been a huge expansion of the health and "wellness" sector.

Sir Ian Prosser, the Six Continents chairman, came under attack from private shareholders over his management of the demerging hotels and bars group.

Brian Wilson, a former employee and small shareholder, ensured the group's annual meeting got off to a lively start by comparing its annual review to a "New Labour document" which was "semi-literate, full of gloss and spin and with upbeat statements designed to disguise an utter shambles".

He said Sir Ian has sold its leisure businesses, such as Coral and Gala, so "other people could make a fortune out of them".

The £2.3 billion sale of Bass Brewers, "ripped the heart out of the company", he said. "We even lost our name . . . Now we are faced with the dismemberment of what is left of the company.

"What a monument to your chairmanship - the destruction of one of the greatest companies in British commercial history. Are you not just a tiny bit ashamed?"

Sir Ian, who remained courteous and unflappable, replied: "I am not at all ashamed about our strategy," pointing out that the group had "outperformed the FTSE 100" over recent years.

Mr Wilson countered that Six Continents, where profits fell from £690m to £534m last year, finished eighth out of its 12 chosen comparator companies. "Who do you think we might outperform? Marconi or Equitable [Life]?"

He pointed out that over the past five years, employees' average earnings had risen by 25pc, while the directors had enjoyed 67pc rises. Mr Wilson noticed that Sir Ian's salary was "down considerably" last year, from £1.27m to £956,000. "Excuse me while I wipe away a tear," he said, adding: "Are you really worth 22 university professors?"

Roger Carr, the non-executive director who heads the remuneration committee, leapt to Sir Ian's defence, praising his "remarkable chairmanship".

Another private shareholder was equally unhappy. "What went down last year?" he asked. "Turnover, profits, margins. What is up? Borrowings, directors' salaries and directors' pensions."

The votes cast on directors' pay, mainly by institutional shareholders, showed 14pc voted against the remuneration report and 3pc abstained.

The meeting coincided with a three-month trading statement showing hotel profits to December 31 "substantially lower" year-on-year than the comparable quarter, which was hit by September 11.

Analysts cut profit forecasts by about £10m to £520m, but the shares rose 11 to 531p on speculation that bidders were lining up for the demerged hotels and pubs businesses. Marriott, Hilton and Starwood are in the frame for hotels.

Six Continents also admitted that its favoured share-option scheme for the demerged hotels business had been changed under pressure from shareholders.

Accor's Ibis hotel group is putting its money where its mouth is. If a problem can't be solved in 15 minutes, the guest's room is free.

Ibis is the first hotel group in Australia and New Zealand to introduce such a pioneering customer satisfaction guarantee.

The 15 Minute Guarantee will be implemented across the network of 12 Ibis hotels in Australia and New Zealand. The Guarantee, combined with the hotel brand's revolutionary People's Price strategy, makes Ibis an unbeatable option for smart travellers wanting value for money without sacrificing on service.

"At all Ibis hotels our philosophy of value, efficiency and transparency is epitomised in a service excellence program which incorporates ongoing staff training and programmes to ensure continuing improvements across all departments," said Roger Batty, Accor's General Manager Economy Hotels. "The Ibis 15 Minute Guarantee is our promise to guests that if they are not completely satisfied with any aspect of their room and we can't fix it within 15 minutes, they will not be charged.

"With the launch of the Ibis 15 Minute Guarantee we are showing our customers that while our facilities have been adapted to ensure our guests get the best price possible, our service is absolutely first class."

Batty admits that at first some of the hotel general managers were Skeptical about introducing such a programme, but trials have shown that 98.4% Of comments were actioned within 15 minutes or less.

"Introducing this programme was a great way to motivate our staff and highlight that their contribution is vital to guest satisfaction," Batty said. "Too many hotels think that facilities are everything. Most people will tell you it is the human element that is principal in guests enjoying their stay and we aim to have our staff offer the highest level of efficient and friendly service."

Based on a month-long trial during which the test hotels sold 3474 rooms, only 11 issues could not be fixed within the specified time – which equates to less than 0.0003%. The most popular guest requests were for extra towels, help with using the remote controls for the television and for changes to the air conditioning temperature.

Fewer than one in nine guests made any sort of request, and of those the vast majority were minor and easily actioned.

"Some of our general managers expected a flurry of complaints about the smallest things but what we found is that most people are honest and onl y expect a free night's accommodation if there is something really wrong,"

Batty said. "Before undertaking this initiative we introduced a comprehensive maintenance programme to identify any possible areas of improvement and conducted extensive staff training across all of our hotels.

I am confident the Ibis network is now ready to face the challenge." Ibis is the leading 3-star hotel brand in Australia and New Zealand and is renowned throughout the world for the hotels' quality, simplicity and value for money. Hotels are conveniently located in central business districts and major regional and suburban areas. There are 10 Ibis hotels in Australia and 2 in New Zealand, with a network of more than 600 worldwide. Accor is the worldwide leader in hotels, tourism and corporate services, employing 150,000 people in 140 countries, with two major international activities:

* hotels: 3,833 hotels (441,203 rooms) in 90 countries (including over 100 hotels and resorts in Australia and New Zealand under the brands Sofitel, Novotel, Mercure, All Seasons, Ibis and Formule 1) as well as \ travel agencies, restaurants and casinos;

* services to corporate clients and public institutions: each day, 13 million people in 32 countries use a broad range of services (employee assistance programs, people care and services, incentive, loyalty programs, events, food vouchers) engineered and managed by Accor.

The following Marriott General Managers in the Asia – Pacific Area were recognized for special achievements in 2002 during the conclusion of the recent Annual General Managers Meeting which took place at the Wardman Park Marriott Hotel in Washington DC:

Robert Frager, General Manager of the New World- and Renaissance Hotels in Kuala Lumpur / Malaysia for Renaissance Hotels and Resorts

Rauf Malik, General Manager of the Kowloon New World/Renaissance Hotel in Hong Kong / China for Renaissance Hotels and Resorts

Kevin J. Beauvais, Area General Manager Thailand of the JW Marriott Resort Hotel in Phuket / Thailand for Marriott Hotels and Resorts

Alison Hood, General Manager of the Singapore Marriott Hotel in Singapore for Marriott Hotels and Resorts

Peter Caprez, General Manager of the JW Marriott Hotel, Bangkok / Thailand for Renaissance Hotels and Resorts. Mr. Caprez was General Manager at the Renaissance Chancery Court Hotel in London / UK until recently.

The awards were presented by J.W. Marriott, President and CEO of the company with George W. Bush, former President of the United States of America – and Barbara Bush, former First Lady in attendance as honorary guests.

Langham Hotels International Limited (LHI) has today announced that its luxury property here, the Great Eagle Hotel, will be re-named the Langham Hotel Hong Kong with effect from October 1st this year.

This follows last month's announcement that Great Eagle Hotels International would now be called Langham Hotels International Limited - a name that holding company, Great Eagle Holdings Ltd., feels more accurately reflects the company's commitment to being at the forefront of the hospitality industry and is more appropriately aligned with its ownership of renowned and prominent hotels. It also sets the benchmark for the group's future international expansion.

The name is derived from the Langham Hotel, London (known as the Langham Hilton) which Great Eagle purchased in 1996 and subsequently further upgraded.

The Langham Hotel is legendary, its name synonymous with gracious hospitality and fine living for over a hundred years. Opened back in 1865 by the Prince of Wales, The Langham was not only London's first 'grand' hotel, but also the city's largest building at the time.

Meanwhile, the Great Eagle Hotel, located in the heart of bustling Tsimshatsui, Kowloon, has recently completed an intensive four year, US$35 million facelift, resulting in the creation of Hong Kong's finest luxury hotel, independent of other major imported brands previously in this market.

Each of the 462 rooms and 25 suites were renovated and equipped with the latest technology, in line with the growing needs of today's discerning traveller who today can enjoy the hotel's elegant European style and opulence with a contemporary twist.

Earlier this year, British newspaper, The Sunday Times, ranked the Great Eagle Hong Kong's 'Langham Suites' among the world's Top 10 High-tech Hotel Rooms and cited the rooms for being "one of the few with en-suite, broadband internet access, 37 inch plasma TV and DVD surround-home theatre."

The hotel has a number of outstanding restaurants, including the award-winning T'ang Court Cantonese restaurant and the popular Bostonian, which serves a huge selection of fresh seafood and lobster. There is also a delightful, Mediterranean-style rooftop pool, a fully equipped Health Club and an extensive banqueting facility.

General Manager, Nigel Roberts, welcomes the new Langham name, saying: "The superior reputation this hotel enjoys today is a result of the intensive effort we have put in to create a truly luxurious property over the past four years. The transition to the Langham name provides the ideal platform and additional momentum for us to continue upholding the high standards we have set for ourselves among the growing portfolio of luxury hotels within this group. It also offers us a marvellous opportunity to generate additional awareness and continue to raise the profile of this wonderful hotel."

Langham Hotels International Limited, the newly renamed hotel subsidiary of Great Eagle Holdings, is a dynamic, modern, high quality hospitality ownership and management company which operates a number of luxury hotels and serviced apartment properties in prime locations within Hong Kong, and asset manages the extensive overseas hotel interests of its parent company, the publicly listed Great Eagle Holdings Limited, Hong Kong.

Properties managed and operated by Langham Hotels International Limited in Hong Kong include the luxury Great Eagle Hotel, a new five star property in Mongkok (due to open in first half of 2004), the superior Eaton Hotel, three Eaton House serviced apartment buildings and the Yat Tung Heen Chinese Restaurants

Overseas properties owned by the Group, and asset managed by Langham Hotels International Limited, include the deluxe Langham Hilton in London, UK; the Sheraton Towers Southgate in Melbourne, Australia; Le Meridien Boston in the USA; the Sheraton Auckland Hotel and Towers in New Zealand; and the four Diamond rated Delta Chelsea Hotel in Toronto, Canada

Hotels are offering generous discounts and terms to keep their meetings business in the pipeline this spring and beyond.

The deals are being driven mostly by weak corporate spending, but another factor is uncertainty about the business impact of war in the Mideast. With the decline in individual business travel the past couple of years, hosting meetings has become the most reliable revenue source for full-service hotels, says PricewaterhouseCoopers hotel consultant Bjorn Hanson.

Many groups are said to be booking meetings closer to the dates out of fear that a declaration of war, a terrorist strike or increased national alert status could derail their event. Planners don't want their groups to have to pay for cancellations or below-expected attendance.

Meeting Professionals International CEO Ed Griffin says the lead time for booking corporate meetings has fallen to as little as two weeks from four to six months.

''They're waiting until the last possible moment to go ahead and put together programs,'' says Jeff Senior, InterContinental's brand vice president. ''What that's doing is causing both the planners and the hotels a great deal of stress.''

To buy goodwill with meeting planners, InterContinental recently waived penalty charges for cancellations and weak attendance for meetings held at its North and South America hotels this year.

The new policy means meeting sponsors won't have to pay fees if a meeting gets canceled or draws fewer people than promised. InterContinental executives hope the policy will encourage more bookings than they lose. Its meetings business is down about 10% from 2000, one of the industry's best years. Senior says InterContinental's Miami hotel is close to signing a major, 1,200-room meeting because of the announcement.

Although the offer hasn't been publicly matched by rival hotels, travel industry executives say some hotels are tying reductions on fees for 2003 meetings to commitments for future business.

''Hotels are being far more negotiable across the board, and not only with the rate itself,'' says Ed Sarraille, CEO of ProcurePoint Travel Solutions, which provides online auctions for meeting planners and corporate buyers.

Among the incentives seen: discounted golf games, free ballroom space and free phone calls

Marriott Introduces Web Site Features that Make Leisure Travel Planning Easier and More Affordable; Marriott.com Sets Record $ 1 Billion in Gross Sales in 2002

/PR Newswire/ - Marriott International, Inc. (NYSE: MAR) announced today several new features to Marriott.com that enable leisure travelers to design their own travel packages, book last-minute weekend getaways and search for the availability of specific rates up to one year in advance. In addition to these enhancements, a new meetings and events planning feature has been launched.

In 2002, Marriott.com set a record generating more than $ 1 billion in gross sales in a single year, representing nearly a seven-fold increase since 1999. Today, more than 75 percent of all Marriott rooms booked on the Internet are reserved through Marriott.com as opposed to third party travel sites.

"We are proud of Marriott.com's continued success. Unlike other major lodging web sites, Marriott.com offers the same hotel rates as the company's other reservation channels. This enables customers to make reservations using the method that they are most comfortable with and eliminates the need to spend time searching for a better deal on multiple reservation channels," said Bruce Wolff, senior vice president, distribution sales and strategy at Marriott.

Enhancements to Marriott.com:

MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading worldwide hospitality company with nearly 2,600 lodging properties in the United States and 66 other countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Ramada International brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. The company is headquartered in Washington, D.C., and has approximately 144,000 employees. In fiscal year 2002, Marriott International reported systemwide sales of $ 19 billion. For more information or reservations, please visit the web site at http://www.marriott.com .

CONTACT: John Wolf, +1-301-380-5718, or john.wolf@marriott.com, or Scott Carman, +1-301-380-6491, or scott.carman@marriott.com, both of Marriott Communications

Newsletter - February 17, 2003